South Florida’s Tax Advantage Over New York is Bigger Than Ever

South Florida has always been a magnet for New Yorkers and other northerners looking to save on their taxes. Florida has some of the lowest taxes of any state in the country, while the State of New York has the highest, and New York City’s is even higher. With the strong cultural connection between the two regions (Miami is sometimes called the ‘sixth borough’) and a dramatic difference in taxation levels, South Florida is an obvious destination.

Now that President Trump’s tax plan is law, that advantage appears to be increasing, particularly for high income earners. This is because the new tax law limits the allowable deduction for state and local taxes to $10,000. And Florida is one of seven states with no state income tax.

Many wealthy New Yorkers are very concerned. The New York Post estimated that with the Trump tax changes “A Florida single resident making $10 million gets $227,619 in tax relief, while the same earner in NY gets socked with $257,177 tax hike because of the loss of SALT, under the new law.”

Even many middle class families would see substantial differences between New York and Florida. “The study showed that a typical family of four that earns $175,000 in the city will pay 25 percent of their income in taxes, compared to 14 percent for the same family of four in Florida.” says the Post.

The tax law has begun a boom of relocations. As early as November, Newsweek reported that the wealthy were fleeing to florida to avoid the approaching higher taxes.

Naturally Florida is aggressively marketing to businesses and wealthy New York residents to relocate. “The new Trump tax law is helping with our recruiting. New York is taxing the rich. Palm Beach is rolling out the red carpet,” said Kelly Smallridge, head of the Palm Beach County’s Business Board, told the Post, but in another quote a New York businessperson unabashedly called it “poaching.”

The new Trump tax law widens the already-significant disparity by limiting state income tax deductions in states like New York where those exist. Compare that to a state like Florida which has no state income tax at all.

Income taxes aren’t the only tax areas where Florida has the clear advantage. Overall, according to Politifact, Florida has the second lowest state taxes per capita, behind Alaska. Considering our local taxes are more middle-of-the-road, Florida remains an extremely tax friendly state in which to live. Meanwhile, New Yorkers pay higher taxes than any other state, according to a WalletHub study. That same study ranked Florida as number 47, just above Tennessee, Delaware, and Alaska. Exact rankings tend to fluctuate slightly depending on the methodology of a study or the way results are presented (percentage of income compared to raw dollar figures, for example.)

Rankings for 2017

BasisNew YorkFlorida
Cost of Living Index By State5110
National Sales and Excise Tax Ranking37 ($2,577)44 ($2,957)
National Income Tax Ranking40 ($1,893)1 ($0)
National Real-Estate Tax Ranking41 ($2,899)27 ($1,894)
Tax Burden By State1 (being highest in the country at 12.94%)45 (being in bottom 10 at 6.79%)

*All other rankings above on a scale of 1 to 51, with 1 being the best and 51 being the worst

Although Florida’s sales tax, about 6 percent in most of the state and 7 percent in Miami-Dade County, is higher than New York State’s 4 percent, it is still lower than New York City’s 8.875 percent. Florida doesn’t charge a state inheritance tax or other form of ‘death tax.’ Florida offers many asset protection benefits, including homestead tax credits, financial and property protection for spouses (called “tenancy by the entirety”), protection of life insurance and IRAs, and protection of property held in business entities. Florida offers property tax benefits for a primary residence, and protections against seizure of that residence in the event of bankruptcy. And incidentally, but rather unsurprisingly, Florida is also home to many top wealth strategists, tax advisors, and estate planning attorneys, many of whom followed the wealthy coming here to protect their money.

So, what’s a New Yorker to do about it all besides move to Florida? The New York State government is experimenting with a few potential tax loopholes to allow its wealthy to keep more of their money, or at least some of what their losing in new taxes. They’re investigating ways of taxing without actually calling it a state tax… like, bizarrely, funneling the revenue into a state charity. Whether this actually works or not is anybody’s guess.

TaxesNew YorkMiami
State Income Tax4 to 8.82% + New York City tax (Approx. 3.75%)None
Sales Tax4% + 4.88% NYC local sales tax7% in Miami-Dade County
Tangible Personal Property Tax (Excluding Real Estate)NoneAd Valorem tax based on category of property. Exemption of up to $25,000
Property TaxStatewide average of 1.5%, and NYC average of 0.72%Average of 1.1%
NYs STAR Homestead Exemption Vs. Florida Homestead Tax ExemptionExemption amount varies by County and income. Exemption stands only against school taxes. Tight cap on tax savings. Not applicable for $500,000+ income earnersExemption amount is same throughout Florida up to $50,000, plus Save Our Homes tax limits annual increases to 3%. No cap on tax savings or income limits.
State Estate Tax5% - 16.0% if your estate is greater than $4.187 million.None
State Corporate Income Tax7.1%, or 6.5% for small businesses5.50%
State Gas Tax43.88 cents a gallon (Top 5 Highest in the Country)36.59 cents a gallon (unleaded)

*All tax rates as of Jan. 1, 2017 or later.

Recent Posts

The Most Luxurious Condo Buildings in Bal Harbour
Real Estate News The Most Luxurious Condo Buildings in Bal Harbour
Bal Harbour condos have always been known to be some of the finest in town. But, what’s so special about these premium addresses that makes them so pricey? We’ve listed the Top 5 Most Luxurious Condo Buildings in Bal Harbour and the outstanding amenities they have that sets them a class apart. Below are the top condos ranked from least to most expensive. Why Choose Bal Harbour? Bal Harbour has always been one of the most coveted oceanside addresses in Miami. Just like the Shops at Bal Harbour are known for showcasing only high-end brands, the neighborhood too is known for housing only the world’s finest residences. Privacy and exclusivity are a given with a Bal Harbour address. Though this ultra-luxury neighborhood has its own tranquil beachfront, it also benefits from being just a 20-minute drive away from South Beach’s spoils and the mainland’s culture and shopping destinations. The Best of the Best Condos in Bal Harbour Palace at Bal Harbour – 10101 Collins Avenue, Bal...
Why Are Luxury Condo Sales Surging in Downtown Miami as Sales Weaken in Miami Beach?
Opinions and Advice Why Are Luxury Condo Sales Surging in Downtown Miami as Sales Weaken in Miami Beach?
Move over Miami Beach, there’s a new rising star on the block. For long, Miami Beach has been the hot favorite for property seekers in Miami. Whether it’s been about purchasing a permanent residence or getting a second home, South Beach properties have always sold out like hot cakes. On the other hand, Greater Downtown (Edgewater and Brickell included) has mostly been a second-best option to South Beach and Miami Beach, possibly out of necessity, with proximity to work being the biggest motivator for local buyers. But, as we’ve been tracing luxury condo trends over the last couple of years via our quarterly market reports, we noticed a reversal. The Greater Downtown area is now emerging as the top favorite among luxury condo seekers. Here are some reasons we are seeing this new trend: Numbers Speak: Miami Beach vs. Greater Downtown Miami Over the past couple of quarters, sales trends in Greater Downtown Miami have been marching ahead, even as those in Miami Beach slowed down....
Massive Lawsuits Won by Miami Condo Associations Mean Awesome Upgrades for Condo Owners and Residents
Real Estate News Massive Lawsuits Won by Miami Condo Associations Mean Awesome Upgrades for Condo Owners and Residents
Recently, a handful of condo associations have scored massive windfalls thanks to lawsuits leveraged against insurers and developers. This is obviously great news for condo associations, and it also usually means that the associations' finances will likely be great for years to come. This in turn translates into improved living conditions for residents of those buildings, since these windfalls provide opportunities for condo associations to make major repairs and improvements that benefit residents.  Oftentimes, the amount of money they win does not actually need to be spent entirely on the issue that motivated the lawsuit (many times the repairs have already been made by the time the lawsuit is settled). This provides a great opportunity for the condo to either fill their reserves and avoid special assessments on future capital improvements and maintenance projects, or simply spend money doing awesome upgrades on various things. Cité Law Suit Settlement Cité in Edgewater In...
The Most Luxurious Condo Buildings in Surfside
Real Estate News The Most Luxurious Condo Buildings in Surfside
Think Surfside, and most would imagine community living by the sea. But, there’s a more luxurious side to Surfside that is offered only by a handful of top-tier residences. To reveal more about that deluxe side, we’ve ranked the Top 5 Luxurious Condo Buildings in Surfside along with their average sales price and list of amenities. Read to find out which Surfside address made it to the list… Why Choose Surfside? This family-oriented beach town comes perfectly positioned between the glamorous Bal Harbour and world-famous Miami Beach. A pocket-sized neighborhood, Surfside is somewhat of an extension of Bal Harbour in some ways and is favored by those looking for community events, friendly neighbors, mom and pop shops and safe streets. Residents absolutely love the uncrowded beaches here that come lined with scenic boardwalks and citywide exhibits dedicated to marine life (read Surfside’s famous turtles). Also, the town has its very own community center that features a lap pool, plunge...
Financing Options for Second Home Buyers
Opinions and Advice Financing Options for Second Home Buyers
Purchasing a second home is embedded in the hearts of many as a sign of true success: the ability to escape to your favorite destination at-will and stay at a place you can still call home and also have it as part of your investment portfolio. Not only will it allow you to save money on lodging if you use it as a vacation home, but it can also provide you a source of income if you rent it out while you’re not using it. There are three common options to choose from to finance the purchase of your second home, and for each you will need good to excellent credit.  Here is what you need to know about each second home loan option. 1. Take out a HELOC on Your Current Home If you’ve owned your primary residence for a few years, chances are you’ve earned equity on the property if its value has gone up.  If so, you can take out a home equity line of credit (HELOC).   A HELOC can help you secure the funds for a down payment or even to purchase the second home outright, depending on the...
Inventory Loans for Unsold Condos Gaining Popularity Among Miami Developers
Real Estate News Inventory Loans for Unsold Condos Gaining Popularity Among Miami Developers
Although pre- and new construction developer sales have picked up in 2019 as compared to the past couple of years, the pace is not necessarily as fast as developers would like, and not all projects are benefiting from the uptick. While many of these new condo projects are averaging 89% - 92% unit sales, those remaining unsold units are currently totaling about 2,101 as of this writing, and developers are turning to inventory loans to capitalize on condos they’ve built that still remain unsold.   Developers have a choice to either reduce their prices to speed up sales, or take out an inventory loan and take a hit on carrying costs versus diminishing the value of their inventory. In Miami, many developers are doing the latter. We can also assume that the money from an inventory loan can be used to pay off other loans or invest in other ventures.  In one recent example, Alirio Torrealba, head of Coral Gables based MG Developer recently closed on a loan from BGI Capital for unsold...